Eric Cantor receives $3.4m for joining Moelis

Eric Cantor, the ousted Republican politician, has joined Moelis & Co for $3.4m and a seat on the board of the boutique investment bank.

The approach occurred over brunch in Los Angeles, according to Mr Cantor and Ken Moelis, founder and chief executive of the bank, and was initially designed just to help Mr Cantor work out what to do after his shock defeat at a Republican primary in June.

“After I had my primary loss I began to think about what my next chapter in my career was going to be and I really didn’t limit my search to Wall Street,” said Mr Cantor, who as House majority leader was seen as one of the most powerful members of Congress. He stepped down from that role before his term expired.

Mr Cantor’s links to finance became an issue during the primary campaign, with his ultimately successful Tea Party challenger David Brat, telling supporters: “All the investment banks in New York and DC – those guys should have gone to jail. Instead of going to jail, they went on Eric’s Rolodex.”

Asked about that line of attack and criticism following the announcement that he was going through the “revolving door” between Washington and Wall Street, Mr Cantor said that “throughout my career in public office . . . I have been very focused on pro-growth economic policy. I’m going to stay focused on how we can best provide competitive advice for, at this point, clients of Moelis.”

Deal-focused banks such as Moelis have been captivated by one recent trend where politics and business collide: the surge of “inversions” – US companies doing acquisitions and moving their registration overseas for tax reasons.

“I’ve always seen the trend towards inversions as symptomatic of a broken tax code,” said Mr Cantor. “Clients of Moelis and Company in this country naturally are going to . . . look to their shareholders and they’re going to assess what’s best for them. That does not have to be mutually exclusive from tax policy.”

Mr Moelis said his new recruit, who is opening a Washington office for the bank, was most valuable for his ability to provide “business advice”. “We have no real need for a lobbying office, for a political adviser, but we do have a need for great experience about the world,” he said. “Even on the Washington office front, that is not a political office. Washington is a crossroads right now. It is an underserved business region.”

The Virginia Republican will receive a sign-on bonus of $1.4m in stock and cash, according to a regulatory filing. Next year, he will be paid an annual salary of $400,000 and a minimum bonus of $1.2m in cash and $400,000 in stock.

Mr Cantor joins Moelis in the middle of a renewed mergers and acquisitions boom this year, with global transaction volume of $2.4tn at the end of August exceeding the value of the full year 2013, according to Thomson Reuters.

Boutique investment banks such as Moelis, Evercore and Centerview have grown rapidly in recent years despite a dearth of deals in the aftermath of the financial crisis, chipping away at the market share of bulge-bracket banks with a pitch to be independent and un-conflicted advisers.

They have also managed to lure away talent from the larger banks, with many of the most senior dealmakers leaving established Wall Street firms to join boutiques.

The rise in M&A fees this year has enthused investors, sending Moelis’ shares up by two-fifths since the Los Angeles firm went public in April and valuing it at $2bn.

Moelis publicly listed its stock this year - seven years after it was founded by Mr Moelis, the former head of UBS investment bank and a Wall Street veteran.